Wednesday, October 29, 2008

*** FED CUTS FED FUNDS 50 BASIS POINTS ***

Press Release

Release Date: October 29, 2008

For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, and San Francisco.

"The voyage of the best ship is a zigzag line of a hundred tacks. See the line from a sufficient distance, and it straightens itself to the average tendency. Your genuine action will explain itself, and will explain your other genuine actions. Your conformity explains nothing."

Ralph Waldo Emerson

"We're all faced throughout our lives with agonizing decisions, moral choices. Some are on a grand scale, most of these choices are on lesser points. But we define ourselves by the choices we have made. We are, in fact, the sum total of our choices. Events unfold so unpredictably, so unfairly. Human happiness does not seem to have been included in the design of creation. It is only we, with our capacity to love, that give meaning to the indifferent universe. And yet, most human beings seem to have the ability to keep trying and even to find joy from simple things, like their family, their work, and from the hope that future generations might understand more."